Federal authorities in Indiana have charged 40 people in a statewide drug operation, including several prison guards and inmates.

Not only did this drug operation reach deep into the Indiana state prison system, it was set up with a supply structure that you would expect from a drug store chain, not an illegal drug network. The heroin suppliers were in Chicago -- methamphetamines, LSD and PCP were allegedly shipped from California.

Several of Indiana's highest security prisons, housing the state's most dangerous criminals, were compromised, according to federal agents.

The indictment unsealed Wednesday reveals that at least three inmates -- led by convicted murderer Oscar Perez -- used cell phones smuggled into prisons by guards to coordinate drug imports from Chicago and California.

At least 17 defendants appeared in court Wednesday, arrested by 300 FBI agents who spread out across the state.

Four of those charged in the drug operation are fugitives and are subjects of a federal law enforcement alert.

U.S. drug agents say that heroin was supplied to the Indiana organization by wholesalers in Chicago. Records state that the operation would shuttle multi-kilo quantities of heroin and cash along the Interstate 65 and Interstate 94 corridor between Indiana and Illinois.

On one occasion, authorities say drug operatives thought they were under surveillance and threw $6,000 in drug proceeds out the window, circling back later to retrieve it.

Only the heroin came from Chicago. Methamphetamine, PCP and LSD were all imported from distributors in California, according to the indictment.

Federal authorities say large shipments of drugs were shipped from California to Indiana through the U.S. Mail, and by UPS and other delivery services.

The heroin from Chicago and meth from California ended up in Porter County, in Elkhart, Lafayette, Indianapolis and in southern Indiana.

The operation allegedly did business at least from June of last year until this month.